Loans and asset quality (Tables)

6 Months Ended

Jun. 30, 2020

Schedule of Loan Portfolio and Industry Concentrations of Credit Risk

The table below provides the details of our loan portfolio.



Loans	June 30, 2020		Dec. 31, 2019
(in millions)
Domestic:
Commercial	$	2,192	$	1,442
Commercial real estate	6,217		5,575
Financial institutions	3,804		4,852
Lease financings	439		537
Wealth management loans and mortgages	15,753		16,050
Other residential mortgages	450		494
Overdrafts	1,073		524
Other	1,489		1,167
Margin loans	11,476		11,907
Total domestic	42,893		42,548
Foreign:
Commercial	253		347
Commercial real estate	11		7
Financial institutions	6,949		7,626
Lease financings	589		576
Wealth management loans and mortgages	122		140
Other (primarily overdrafts)	3,147		2,230
Margin loans	1,433		1,479
Total foreign	12,504		12,405
Total loans (a)	$	55,397	$	54,953

(a)

Net of unearned income of $292 million at June 30, 2020 and $313 million at Dec. 31, 2019 primarily related to domestic and foreign lease financings.

Summary of Transactions in the Allowance for Credit Losses

Activity in the allowance for credit losses on loans and lending-related commitments is presented below.



Allowance for credit losses activity for the quarter ended June 30, 2020											Wealth management loans and mortgages			Other residential mortgages
(in millions)	Commercial		Commercial real estate		Financial institutions			Lease financings			Wealth management loans and mortgages			Other residential mortgages			Total
Beginning balance	$	26	$	208	$	18		$	13		$	9		$	14		$	288
Charge-offs	—		—		—			—			—			—			—
Recoveries	—		—		—			—			—			3			3
Net recoveries	—		—		—			—			—			3			3
Provision	14		164		(2		)	(10		)	2			(5		)	163
Ending balance (a)	$	40	$	372	$	16		$	3		$	11		$	12		$	454
Allowance for:
Loan losses	$	23	$	244	$	11		$	3		$	9		$	12		$	302
Lending-related commitments	17		128		5			—			2			—			152
Individually evaluated for impairment:
Loan balance	$	—	$	—	$	—		$	—		$	18	(b)	$	—		$	18
Allowance for loan losses	—		—		—			—			—			—			—


(a)	Includes $11 million of allowance for credit losses related to foreign loans, primarily financial institutions.


(b)	Includes collateral dependent loans of $18 million with $26 million of collateral at fair value.



Allowance for credit losses activity for the quarter ended March 31, 2020											Wealth management loans and mortgages				Other residential mortgages
(in millions)	Commercial			Commercial real estate		Financial institutions			Lease financings		Wealth management loans and mortgages				Other residential mortgages			Foreign			(a)	Total
Balance at Dec. 31, 2019	$	60		$	76	$	20		$	3	$	20			$	13		$	24			$	216
Impact of adopting ASU 2016-13	(43		)	14		(6		)	—		(12		)		2			(24		)		(69		)
Balance at Jan. 1, 2020	17			90		14			3		8				15			—				147
Charge-offs	—			—		—			—		—				—			—				—
Recoveries	—			—		—			—		—				—			—				—
Net (charge-offs) recoveries	—			—		—			—		—				—			—				—
Provision	9			118		4			10		1				(1		)	—				141
Ending balance (b)	$	26		$	208	$	18		$	13	$	9			$	14		$	—			$	288
Allowance for:
Loan losses	$	13		$	83	$	10		$	13	$	7			$	14		$	—			$	140
Lending-related commitments	13			125		8			—		2				—			—				148
Individually evaluated for impairment:
Loan balance	$	—		$	—	$	—		$	—	$	18		(c)	$	—		$	—			$	18
Allowance for loan losses	—			—		—			—		—				—			—				—


(a)	The allowance related to foreign exposure has been reclassified to financial institutions ($10 million), commercial ($10 million) and lease financings ($4 million).


(b)	Includes $12 million of allowance for credit losses related to foreign loans, primarily financial institutions.


(c)	Includes collateral dependent loans of $18 million with $26 million of collateral at fair value.



Allowance for credit losses activity for the quarter ended June 30, 2019												Wealth management loans and mortgages			Other residential mortgages			All other			Foreign		Total
(in millions)	Commercial			Commercial real estate			Financial institutions			Lease financings		Wealth management loans and mortgages			Other residential mortgages			All other			Foreign		Total
Beginning balance	$	82		$	74		$	23		$	4	$	21		$	15		$	—		$	29	$	248
Charge-offs	—			—			—			—		(1		)	—			—			—		(1		)
Recoveries	—			—			—			—		—			2			—			—		2
Net (charge-offs) recoveries	—			—			—			—		(1		)	2			—			—		1
Provision	(5		)	(2		)	(2		)	—		—			(3		)	—			4		(8		)
Ending balance	$	77		$	72		$	21		$	4	$	20		$	14		$	—		$	33	$	241
Allowance for:
Loan losses	$	23		$	57		$	8		$	4	$	17		$	14		$	—		$	23	$	146
Lending-related commitments	54			15			13			—		3			—			—			10		95
Individually evaluated for impairment:
Loan balance	$	96		$	—		$	—		$	—	$	16		$	—		$	—		$	—	$	112
Allowance for loan losses	10			—			—			—		—			—			—			—		10
Collectively evaluated for impairment:
Loan balance	$	1,356		$	5,192		$	4,574		$	662	$	15,563		$	549		$	12,849	(a)	$	11,539	$	52,284
Allowance for loan losses	13			57			8			4		17			14			—			23		136


(a)	Includes $1,575 million of domestic overdrafts, $10,152 million of margin loans and $1,122 million of other loans at June 30, 2019.



Allowance for credit losses activity for the six months ended June 30, 2020											Wealth management loans and mortgages			Other residential mortgages			Foreign			Total
(in millions)	Commercial			Commercial real estate		Financial institutions			Lease financings
Balance at Dec. 31, 2019	$	60		$	76	$	20		$	3	$	20		$	13		$	24		$	216
Impact of adopting ASU 2016-13	(43		)	14		(6		)	—		(12		)	2			(24		)	(69		)
Balance at Jan. 1, 2020	17			90		14			3		8			15			—			147
Charge-offs	—			—		—			—		—			—			—			—
Recoveries	—			—		—			—		—			3			—			3
Net recoveries	—			—		—			—		—			3			—			3
Provision	23			282		2			—		3			(6		)	—			304
Ending balance	$	40		$	372	$	16		$	3	$	11		$	12		$	—		$	454



Allowance for credit losses activity for the six months ended June 30, 2019													Wealth management loans and mortgages			Other residential mortgages			All other		Foreign		Total
(in millions)	Commercial			Commercial real estate			Financial institutions			Lease financings			Wealth management loans and mortgages			Other residential mortgages			All other		Foreign		Total
Beginning balance	$	81		$	75		$	22		$	5		$	21		$	16		$	—	$	32	$	252
Charge-offs	(11		)	—			—			—			(1		)	—			—		—		(12		)
Recoveries	—			—			—			—			—			2			—		—		2
Net (charge-offs) recoveries	(11		)	—			—			—			(1		)	2			—		—		(10		)
Provision	7			(3		)	(1		)	(1		)	—			(4		)	—		1		(1		)
Ending balance	$	77		$	72		$	21		$	4		$	20		$	14		$	—	$	33	$	241

Distribution of Nonperforming Assets

The table below presents our nonperforming assets.



Nonperforming assets	June 30, 2020						Dec. 31, 2019
	Recorded investment
	With an allowance		Without an allowance
(in millions)					Total
Nonperforming loans:
Other residential mortgages	$	58	$	—	$	58	$	62
Wealth management loans and mortgages	10		18		28		24
Total nonperforming loans	68		18		86		86
Other assets owned	—		2		2		3
Total nonperforming assets	$	68	$	20	$	88	$	89

Information about Past Due Loans

The table below presents our past due loans.



Past due loans and still accruing interest	June 30, 2020								Dec. 31, 2019
	Days past due						Total past due		Days past due						Total past due
(in millions)	30-59		60-89		≥90		Total past due		30-59		60-89		≥90		Total past due
Wealth management loans and mortgages	$	31	$	6	$	—	$	37	$	22	$	5	$	—	$	27
Other residential mortgages	5		1		—		6		8		3		—		11
Financial institutions	—		—		—		—		1		30		—		31
Commercial real estate	—		—		—		—		6		12		—		18
Total past due loans	$	36	$	7	$	—	$	43	$	37	$	50	$	—	$	87

Credit Profile of Loan Portfolio by Origination

The table below provides information about the credit profile of the loan portfolio by the period of origination.



Credit profile of the loan portfolio													June 30, 2020
													Revolving loans
	Originated, at amortized cost												Amortized cost		Converted to term loans - Amortized cost				Accrued interest receivable
(in millions)	YTD20		2019		2018		2017		2016		Prior to 2016						Total (a)
Commercial:
Investment grade	$	107	$	213	$	106	$	554	$	57	$	—	$	1,054	$	—	$	2,091
Non-investment grade	40		69		12		—		3		—		230		—		354
Total commercial	147		282		118		554		60		—		1,284		—		2,445		$	3
Commercial real estate:
Investment grade	500		1,212		806		550		431		422		292		—		4,213
Non-investment grade	77		410		459		179		421		212		228		29		2,015
Total commercial real estate	577		1,622		1,265		729		852		634		520		29		6,228		8
Financial institutions:
Investment grade	27		247		133		125		14		181		7,934		—		8,661
Non-investment grade	53		29		—		—		—		—		2,010		—		2,092
Total financial institutions	80		276		133		125		14		181		9,944		—		10,753		25
Wealth management loans and mortgages:
Investment grade	34		81		12		171		56		85		6,877		—		7,316
Non-investment grade	—		—		—		—		—		35		79		—		114
Wealth management mortgages	491		1,126		719		1,360		1,736		2,976		37		—		8,445
Total wealth management loans and mortgages	525		1,207		731		1,531		1,792		3,096		6,993		—		15,875		27
Lease financings	45		20		20		12		29		902		—		—		1,028		—
Other residential mortgages	—		—		—		—		—		450		—		—		450		2
Other loans	—		—		—		—		—		—		1,530		—		1,530		1
Margin loans	2,552		1,000		—		—		—		—		9,357		—		12,909		11
Total loans	$	3,926	$	4,407	$	2,267	$	2,951	$	2,747	$	5,263	$	29,628	$	29	$	51,218	$	77

(a)

Excludes overdrafts of $4,179 million. Overdrafts occur on a daily basis primarily in the custody and securities clearance business and are generally repaid within two business days.